PASPA Explained and Why It Was Ruled Unconstitutional

The Professional and Amateur Sports Protection Act of 1992 (PASPA) was a federal law and single biggest obstacle to legal sports betting in the USA from 1993 until it was stricken down by the Supreme Court in 2018.

PASPA was signed into law by President George H.W. Bush in 1992 and took effect in January of 1993. The law would sometimes be referred to as the Bradley Act after Senator Bill Bradley of New Jersey, but today most simply refer to it as PASPA.

PASPA Explained

While it was in effect, PASPA made it unlawful for states to “sponsor, operate, advertise, promote, license, or authorize” sports betting in any form. PASPA effectively prohibited sports betting across the United States minus a few exceptions for sports betting schemes that were already legal at the time the law took effect or within one year of the law taking effect.

Nevada received the only exemption for true, full-on sports betting. While PASPA was in effect, Nevada had a near-monopoly on sports betting in the USA and an actual monopoly on single-game betting.

In no other state was it legal to bet on the outcome of a single game, the point total or, say, the winner of a golf tournament. This is why for decades, the only way to place a legal bet on the Super Bowl was to book a flight to Nevada.

Delaware, Montana and Oregon also received exemptions for certain types of sports games offered by their state lotteries. These games were limited in scope and were not even offered the entire time PASPA was in effect. Oregon, for example, ended its own Sports Action product in 2007 in order to entice the NCAA to host championships in Oregon.

The three major exemptions outside of Nevada included:

Delaware Sports Lottery: The Delaware Lottery allows customers to place parlay-style wagers on the outcomes of NFL games. These wagers must include the outcomes of at least three games and players must be correct on the outcome of every game to receive a payout.

Oregon Sports Action: The Oregon Lottery introduced Sports Action games in 1989 allowing customers to place parlay-style wagers on NFL and NBA games. The NBA games were discontinued in 1990, and then the NFL games were discontinued in 2007.

Montana Betting Squares: At the time PASPA was passed, Montana allowed sports pools and betting squares games not played against the house. Those games received exemptions but were still a far cry from actual sports betting as we know it.

PASPA itself did not outlaw sports betting across the nation; it simply prohibited states from authorizing it. This seems like a minor distinction, but this is a distinction that would eventually lead to PASPA’s downfall in front of the Supreme Court.

Despite PASPA being in force for over 25 years, it did little beyond putting a dent in sports betting in the United States. Underground bookies and offshore sports betting websites stepped in to fill the void and create a massive, unregulated industry. According to some estimates, Americans continued to wager upwards of $150 billion a year despite the ban.

New Jersey vs. PASPA

The first real challenge to PASPA originated from a New Jersey effort to legalize sports betting within state borders. In 2011, New Jersey voters approved a referendum asking if the state constitution should be amended to permit sports wagering at local racetracks and casinos.

After voters approved the referendum, the New Jersey legislature introduced a bill later that year seeking to follow-up on the amendment. Lawmakers sent the bill to Governor Chris Christie, and he signed it into law in January of 2012.

This prompted the NCAA, NFL, NBA, MLB and NHL to sue to stop the law from taking effect, citing PASPA. This kicked off what would become a 6-year legal battle with New Jersey on one side and the sports leagues on the other.

A district court ruled against New Jersey and then the Third Circuit Court of Appeals affirmed that ruling. New Jersey petitioned the Supreme Court to hear its case, but the Supreme Court declined to hear it in 2014.

Undeterred, lawmakers in New Jersey continued to push the issue and introduced another law in 2014 that sought to merely repeal the state’s own sports betting prohibition. This too led to another loss for New Jersey in front of the Third Circuit.

New Jersey again petitioned the Supreme Court to hear the case. Considering the Supreme Court’s decision last time around, many called it a long shot play. The US Solicitor General made it even more of a long shot in 2017 when he recommended the Supreme Court not hear the case.

The Supreme Court ultimately decided to hear the case, and this is when the momentum changed in a big way. After the first oral arguments were presented by both sides, news media began speculating that the Justices seemed sympathetic to New Jersey’s case. After so many years as an underdog, New Jersey was starting to look like it could very well win at the highest court.

On Monday, May 14th, 2018, the Supreme Court issued its much-anticipated ruling to finally put to rest the debate once and for all: PASPA is an unconstitutional law and is stricken down in its entirety.

This was the best possible outcome for New Jersey and sports betting in general. The Supreme Court could have issued a narrow ruling to avoid the constitutional question entirely. For example, the Supreme Court could have ruled in favor of New Jersey in this specific case but without striking down PASPA entirely. New Jersey would have won a minor battle, but other states would have missed out on the opportunity to regulate sports betting as they see fit.

Justice Ruth Bader Ginsburg noted in her dissent that the Supreme Court could have left parts of PASPA intact. Rather than wielding “an axe,” she wrote, the Court could have used “a scalpel to trim the statute.”

For those of us in favor of legal sports betting, the Supreme Court’s decision was perfect. Individual states are now free to legalize and regulate sports betting as they choose. A number of states already have legislation either in place or are working on legislation to do exactly that.

Where PASPA’s Authors Went Wrong

The Supreme Court ruled against PASPA as a clear violation of provisions in the 10th Amendment forbidding Congress from commandeering state legislatures. As written, PASPA forbid states from enacting laws they had every right to act.

Justice Samuel Alito put it in clear terms when he wrote in the decision:

“In either event, state legislatures are put under the direct control of Congress. It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals. A more direct affront to state sovereignty is not easy to imagine.”

Congress does have the power to regulate private actors at the federal level. PASPA’s authors went wrong when they wrote the bill directing sates how to legislate the issue. If PASPA would have simply criminalized sports betting for individuals, it would likely have survived New Jersey’s challenge.

Justice Alito further explained that Congress could have regulated sports betting directly. Instead, Congress sought to commandeer the states by forbidding them from regulating sports betting. In part, he said “Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own.”

Some in Congress have expressed an interest in introducing new sports betting legislation at the federal level providing uniform regulations across all 50 states. Some of the major sports leagues also support such a plan. However, widespread support for federal legislation does not appear strong at this time.